What the PGA-LIV combination means for brands

The PGA Tour will come out of its surprise merger with rival LIV Golf with a bruised reputation and sponsors that may rethink their association with pro golf, experts say.

The deal, which was announced Tuesday, unites the commercial businesses and rights of the PGA Tour and DP World Tour with upstart LIV Golf. The Public Investment Fund, the Saudi sovereign wealth fund that backed LIV Golf, will be the exclusive investor in the new for-profit entity, which will take on a new name. The fund will also become a premier sponsor of the PGA Tour.

Saudi Arabia has been accused of numerous human rights violations, including the 2018 murder of journalist Jamal Khashoggi, which the CIA has concluded was ordered by Saudi Crown Prince Mohammed bin Salman. Its investments in golf, including luring top players away from the PGA Tour, have been denounced as “sportswashing” its human rights record, and until this week had drawn the condemnation of PGA Tour Commissioner Jay Monahan. 

If the sportswashing rap sticks to the PGA, its partnering brands could be sullied along with it, some say. Others see opportunity for brands as a result of the combination.

Navigating the new sponsor landscape

Dale Song, chief partnerships and consulting officer for Omnicom’s Optimum Sports division, said brands would likely take a “wait and see” approach while they learn the details of the deal. 

“A lot of details of what this merger means are still not public,” Song said. “Sponsors should work with more information before deciding a course of action. That said, brands that rely on a golf platform to engage a specific demographic will need to find a way to navigate this new landscape.”

David Carter, principal at The Sports Business Group and adjunct professor of sports business at the University of Southern California, said he felt the PGA would suffer near-term damage but that the pain would be temporary.

“While the brand has certainly been damaged near-term, any damage may be offset over time given the short attention span of many fans and consumers, as well as those that finance the sport—no matter the gravity of the issues in play,” Carter said in an email. “I liken it a bit to those that vehemently oppose the placing of billboards along their streets. They routinely get used to them as they drive past and, in some cases, even begin to look forward to them being changed out every few months. All of which to say that it is a calculated risk and an educated guess by the PGA that will surely leave many beyond disappointed for at least the foreseeable future.”

Sports marketing consultant Tony Ponturo said he anticipates that brands partnering with the PGA would proceed with caution as they learn more about the combined entity.

“If I was a sponsor, I would be calling Jay Monahan immediately to understand the deal and what am I really sponsoring,” Ponturo said.

Some advertisers may be especially sensitive to controversy today, Ponturo added, pointing to Anheuser-Busch InBev's struggle to move beyond the controversy over Bud Ligth's collaboration with a transgender influencer and the scrutiny Target has faced for pulling some Pride items in stores in face of conservative backlash.

Read more: Navigating LGBTQ+ marketing amid culture wars

“For some advertisers, it’s a sensitive time right now,” said Ponturo, a former AB InBev executive. “So I think all advertisers are going to be really sensitive.”

AB InBev, owner of PGA Tour sponsors Michelob Ultra and O’Doul's, was not immediately available for comment.

The PGA lists 58 official marketing partners on its web page. Several, including FedEx, Getty Images, Pacific Life, Morgan Stanley, Mastercard and Korn Ferry, did not immediately return requests for comment.

Rocket Mortgage, the title sponsor of an upcoming PGA event in Detroit, is “looking forward to learning more” about the merger, the event's executive director told Crain's Detroit Business. Rocket last year cut ties with golfer Bryson DeChambeau when he opted to join the LIV tour.

'Hypocrisy and greed'

The agreement ends pending litigation between the PGA Tour and LIV Golf. The organizations said they would work cooperatively to establish a process for players who desire to reapply for membership with the PGA Tour or the DP World Tour following the completion of the 2023 season. Monahan had previously announced indefinite suspensions for LIV defectors, including top talent such as Phil Mickelson, Brooks Koepka and Dustin Johnson.

Some strongly condemned the PGA Tour for making the deal, including sports journalist Christine Brennan, and Chris Murphy, the Democratic U.S. senator from Connecticut. Brennan called the agreement “reprehensible” and said the PGA Tour “wimped out.” Terry Strada, chair of 9/11 Families United in a statement said “PGA Tour leaders should be ashamed of their hypocrisy and greed.”

Fans have mixed feelings. U.S. sports fans are far more opposed (46%) than supportive (28%) of athletes playing in a league or team with Saudi Arabia’s financial backing, with the rest indicating they’re unsure or have no opinion on the issue, according to Kantar Sports Monitor’s 2023 Fan Engagement study released on Wednesday afternoon.

Among LIV Golf fans, support was higher at 54%, the survey showed; fans of the PGA Tour were essentially evenly matched with 42% supporting Saudi-backed sports and 41% opposed, the Kantar survey showed.

Ricardo Fort, founder of Sport by Fort Consulting and a former sponsorship executive for Visa and Coca-Cola Co., said he felt that fans and sponsors would stay with the PGA Tour, saying the merger would ultimately help pro golf.

“I doubt there will be any meaningful negative impact on the PGA brand,” Fort said. “These associations between clubs, leagues and federations with Middle Eastern investment funds is not something most fans pay attention to. Sponsors do notice, but hardly take any action. So despite all the talk and all the criticism, the most likely scenario is that life will go on for the PGA [Tour] and fans as if nothing had happened.”

Fort said he believes sponsors would ultimately benefit from the merger.

“There will be more events, larger purses attracting all [the] best players, no competition of a challenger league and much higher investment to promote the sport,” Fort said.

Golf innovation from LIV, such as team play, could also present new opportunities for advertisers, Song said.

“The team golf concept, global endeavors, rule changes that LIV introduced may force the Tour to evolve,” said Song. “Where there is evolution, there may be opportunity.”